2015 RRSP Thread

[troutman]

Originally Posted by 1stLand

Slava, if you had $1M in cash, how would you invest it?

$1M bet on every Flames-Oilers game since 2008 with wealthy Oilers fan, would have returned you $19M!

[MoneyGuy]

Originally Posted by 1stLand

Slava, if you had $1M in cash, how would you invest it?

I hear that question often and there is no good, quick answer. What might be a good investment for you might be totally different than what is right for your neighbour, or even your spouse. There are lots of questions to first answer before anyone can advise you on that. Slava is the second best advisor in Alberta and that's pretty darn good so call Slava.

[Slava]

Originally Posted by troutman

$1M bet on every Flames-Oilers game since 2008 with wealthy Oilers fan, would have returned you $19M!

Make some of those games double or nothing along the way and you could really make some money!

[Calgary14]

Not directly related to the RRSP but a new study came out today saying that doubling the TFSA limit would only benefit the wealthy.

http://www.cbc.ca/news/politics/doub...gues-1.2967796

The study estimates if someone put the annual contribution limit in every year they could earn up to $8M over their lifetime (assuming the contribution limit gets doubled).

[MoneyGuy]

Originally Posted by Calgary14

Not directly related to the RRSP but a new study came out today saying that doubling the TFSA limit would only benefit the wealthy.

http://www.cbc.ca/news/politics/doub...gues-1.2967796

The study estimates if someone put the annual contribution limit in every year they could earn up to $8M over their lifetime (assuming the contribution limit gets doubled).

I think doubling the limit is a really bad idea.

[Slava]

Originally Posted by MoneyGuy

I think doing that is a really bad idea.

Which is a bad idea? The doubling the limit you mean?

[MoneyGuy]

Originally Posted by Slava

Which is a bad idea? The doubling the limit you mean?

Yes, doubling the limit.

[Fire]

Originally Posted by MoneyGuy

I think doubling the limit is a really bad idea.

I'm hoping they double the TFSA contribution. Probably eliminates the need for me to put anymore money in my RRSPs.

[Bill Bumface]

Selfishly it sounds great. But as the article says, the percentage of people hitting the max every year is pretty low. All it's doing is taking away tax burden from people who are diligent savers or have cash to burn, and everyone else has to pick up that slack.

[darklord700]

Originally Posted by Calgary14

The study estimates if someone put the annual contribution limit in every year they could earn up to $8M over their lifetime (assuming the contribution limit gets doubled).

This figure must be obtained by investing in stocks which under the current rules are only 50% taxable. And you lose the DTC credits with TFSA so I don't think the benefit is as great as the article makes it sound like.

[IliketoPuck]

Originally Posted by mrkajz44

No I'm not, I'm placing a value on the tax I would have had to pay today, rather than pay it in 30 years.

Say I make $100 and my tax rate is 30%.

Option 1 - Get taxed at 30% now and invest the $70
Option 2 - Invest in RRSP and invest $100 now

Over time, the $100 will earn far more money than the $70. Let's say we triple our money by retirement.

Option 1 - I have tax of 30% on my earnings of $140, so $42, leaving me with a total of $168 ($210 less tax of $42)
Option 2 - I have tax of 30% on my entire RRSP amount of $300, so $90, leaving me with $210 ($300 less tax of $90)

I never changed my marginal rate of tax, it stayed constant at 30%. Yet, I've come out ahead in option 2 with the RRSP because I was able to earn income on the $30 that wasn't taxed up front.

You missed the point of Locke's post.

There is zero guarantee that your investments will earn a rate of return equal to or greater than the rate of inflation, therefore your purchasing power will erode, regardless of the number of years you defer taxes for.

[I_H8_Crawford]

Originally Posted by hulkrogan

Selfishly it sounds great. But as the article says, the percentage of people hitting the max every year is pretty low. All it's doing is taking away tax burden from people who are diligent savers or have cash to burn, and everyone else has to pick up that slack.

I guess the question is why is the percentage so low? If it is because most people need to use that money to put food on the table then I get it. But if it is because they have maxed out their credit to drive a new car, live in a $600K house, and eat out each night, I don't know why I should care... IMO if the latter is the larger cause, then it is not a case of the TFSA benefitting the rich, it's a case of the TFSA benefitting people who are smart with their money.

I save a lot of my money, so selfishly, I want the limits doubled so I can have a very comfortable retirement.

[I_H8_Crawford]

Originally Posted by MoneyGuy

I think doubling the limit is a really bad idea.

just curious... Why?

[Fire]

Originally Posted by darklord700

This figure must be obtained by investing in stocks which under the current rules are only 50% taxable. And you lose the DTC credits with TFSA so I don't think the benefit is as great as the article makes it sound like.

Yeah 8 million sounds far fetched to me. Sure, some people will really hit a home run with the stock market and make that much, but the article doesn't mention the people that pick a bunch of losers and pretty much wipe out their TFSA.

[Bill Bumface]

Originally Posted by I_H8_Crawford

I guess the question is why is the percentage so low? If it is because most people need to use that money to put food on the table then I get it. But if it is because they have maxed out their credit to drive a new car, live in a $600K house, and eat out each night, I don't know why I should care... IMO if the latter is the larger cause, then it is not a case of the TFSA benefitting the rich, it's a case of the TFSA benefitting people who are smart with their money.

I save a lot of my money, so selfishly, I want the limits doubled so I can have a very comfortable retirement.

If there was mechanisms in place to only transfer the tax burden to those specific people, I'm all for it. That's not usually how it works however. People struggling to put food on the table will be partially picking up the tab for my tax savings.

[bizaro86]

Originally Posted by I_H8_Crawford

I guess the question is why is the percentage so low? If it is because most people need to use that money to put food on the table then I get it. But if it is because they have maxed out their credit to drive a new car, live in a $600K house, and eat out each night, I don't know why I should care... IMO if the latter is the larger cause, then it is not a case of the TFSA benefitting the rich, it's a case of the TFSA benefitting people who are smart with their money.

I save a lot of my money, so selfishly, I want the limits doubled so I can have a very comfortable retirement.

The public (and therfore politicians) often have trouble with the idea that people who are smart with their money are the ones who end up rich.

[Sylvanfan]

Isn't it the future revenue loss for Government that is causing the stir? Really anyone earning say 50 grand a year really has to live a frugal life to save much above the 5500 limit. Is that not the people the TFSA is supposed to help most because their immediate tax savings in a RRSP isn't as much as a high earner.

So it is a way to allow those who can easiest afford to pay taxes a way around it.

[wwkayaker]

I am a Canadian but my fiancée is American. It appears as though I will be moving to the USA in the summer of 2016. Can anybody point out the tax implications of having an RRSP but living and working in the states? Of course, I have no idea which country I will be living in when I retire but I would like to split my time between the.

So, with the RRSP deadline looming, should I add to my RRSP or not given my circumstances?

[Ozy_Flame]

Is it normal to owe every year? I make just under six digits and I'm contributing 10% of my paycheque to an RRSP every paycheque. Part of my income is variable and I earn it twice a year, and pay full tax on it every paycheque. Why the hell does it seem like I owe every year? This year is no different. Is this normal?

[Sylvanfan]

^^^
I end up owing about $300 a year every year, with charity donations and children's fitness art credits plus RRSP. My RRSP contributions are done as payroll deductions. Still payroll miscalculated this every year. In the end it's better to owe than be owed as you get the government's money interest free for 4 plus months.